How HRM Contributes to an Organisation's Effectiveness and Ineffectiveness

BUSM4588 - Key Concepts in Human Resource Management
Assessment Task 2
Name
4/20/2018

Introduction
This essay discusses how human resource management (HRM) contributes to an organisation’s
effectiveness as well as its ineffectiveness. The Australian Human Resource Institute (AHRI) Model of
Excellence is the tool used in this essay. This tool is a graphical depiction of expected behaviours and
capabilities essential for HR practitioners to effectively manage their portfolios. The essay discusses the
areas of HRM practice, procedures, strategy, employee development, and talent management. It also
considers ethics and how understanding employee relations impacts on the effectiveness of an
organisation. Examples where HRM has been effective, as well as where it has been ineffective, are
considered. The essay concludes with the hurdles that mark the line between the corporation being
effective or ineffective
How HRM contributes to an organisation’s effectiveness
Human resource management (HRM) is a procedure that enables employment of people, providing them
with adequate training, paying them for the work they perform, formulating workplace policies, and
formulating strategies to retain them, hence reducing competition for them by other employers. HRM
has undergone many changes in the past two decades, from a mere administrative role to a more
proactive role which is significant and imperative for the success of a company (Schramm, 2012).
A working HRM Practice and Procedures manual helps businesses to deal with human resource issues
in a tactful manner even when facing internal or external hurdles. If HRM is well managed, then
business houses are able to prioritise their business needs accordingly. The changing business
environment has ensured that human capital is one of the most prized assets of businesses. Modern
organisations have understood that the employees are highly involved in the operations of the company,
as well as making many important decisions. Furthermore, more than 50% of the total budget of a
company is often invested in human capital, so improper management of HRM could lead to the fall of a
company (Feffer, 2017).
HRM has ensured that employees are considered a vital corporate asset. To ensure that the workforce is
effective, senior staff have to understand the worth of having a suitable human resource strategy in
place. The blending of HRM with the overall strategy of an organisation is rare, but at the same time
indispensable within larger organisations (Paauwe 2004). Most firms find it difficult to convert HRM
into strategic functions due to significant variation in skills, attitude, and competency of their employees
and thus end up concentrating on the clerical part of the job. The result is that individual departmental
managers find it impossible to inculcate necessary changes in their staff and hence fail to deliver the
desired output. The importance and contribution of HRM to the effectiveness of an organisation is a
hidden secret which most companies fail to recognise and nurture.
The contribution of HRM to an organisation’s success cannot be ignored. There is a positive correlation
throughout the literature between the development of the manpower of an organisation and its
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performance. Any company can achieve its goals through teamwork, but that can be a success only if
team commitment is shared via awareness, and employees’ capacity and proficiency is developed by
providing appropriate training and surroundings which encourage people to work for the company and
not just their individual goals. A company hopes to expands its capacity to produce goods, but this
bright future is highly dependent upon the competence of the employees. The effectiveness of HRM will
be reflected in the way it helps the company to execute the strategies it formulates (Schuler & Jackson,
2014).
HRM can be very effective by creating a workplace culture and work environment where employees
contribute effectively. Google is one such company that deliberately created a workplace culture and
work environment where people contribute and are happy and motivated. Their basic needs are satisfied
by the organisation, making it possible for employees to work with dedication towards the assigned
objectives (Monks et al.2013). To enhance motivation, very good salary and monetary incentives are
given to employees so that operational standards can be attained effectively. However, payment is based
on performance, meaning that a high performer gets a higher salary than a low performer. There have
been controversies in recent times about whether money plays any role in motivating employees to
perform better. Present day critics are of the opinion that money is not the motivating factor anymore for
people to perform well, and that focusing on it motivates individuals to concentrate on money only and
not on their performance (Rowley & Jackson, 2011).
HRM performs the function of managing the talent, i.e. it employs and retain the best staff possible and
this is considered its most important objective. Nowadays, corporations take various steps to retain
productive manpower by providing incentives, personalised career programs, mentorship programs, and
flexible work arrangements to balance personal and professional life. HRM also conducts performance
management, where it not only manages the contribution of a person towards the success of the
company, but also develops the employee as an individual (Gomez-Meiji et al., 2007). This enables an
employee to be self-motivated towards achievement of the organisational goal. However, without an
effective HRM system, there would be nobody who would understand the needs of the employees and
work towards satisfying them. Thus talent management is one area where HRM can prove its worth to
an organisation as a contributor to its effectiveness. Talent is the main problem at the top level, i.e.
senior personnel and the board of a company, and dealing with it is directly related to organisational
design, performance appraisal systems, strategy, policy, and change management (Lawler, 2014).
Recruitment of talent, rather than just experience, can enable HR to play a larger role in organisational
effectiveness.
For example, Microsoft follows the strategy of openness, and incorporates convenience into product
planning, research and development, testing, implementation, and control. The most striking feature of
this company is that when it first hired people, the company specifically looked for talent over
experience and believed that the effectiveness and efficiency of its developers was key to the success of
Microsoft. If twenty of its best employees at that time had left the company, then it would not be what it
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